Don't Do It

Stocks that are headed for oblivion - - think Enron - - don't go from $90 to $0 in one day. They get there in lurches.

It can be tempting to buy a stock for $5 that used to be $60, thinking how easy it would be for it to pop 25% overnight. It happens all the time. And for a few lucky ones, it can be really profitable.

But I urge you not to do this. The FRE and FNM of the world are very dangerous, and during each of the tinted times shown below, people thought they had nailed the bottom. I imagine most of them sold only when their profits had turned into painful losses.